WEBVTT - Bloomberg Surveillance TV: April 11, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:36.959 Terminal and the Bloomberg Business App. I'm pleased to say 0:00:36.960 --> 0:00:39.440 that joining us now is the seventeenth United States Secretary 0:00:39.440 --> 0:00:43.479 of Energy, self described energy nerd turned entrepreneur now dedicated 0:00:43.520 --> 0:00:46.960 his time to public services. Mister Secretary Chris Right, thank 0:00:47.000 --> 0:00:49.320 you very much for joining Bloomberg Surveillance this morning. We 0:00:49.360 --> 0:00:52.080 appreciate your time. We just wanted an initial reaction from 0:00:52.120 --> 0:00:56.520 you to the tariffs we heard retaliated by China overnight. 0:00:56.560 --> 0:00:58.200 What's your reaction this morning, sir. 0:01:01.120 --> 0:01:03.000 Oh, I think you see we're right in the midst 0:01:03.000 --> 0:01:06.839 of a negotiation. This is home territory for President Trump, 0:01:07.200 --> 0:01:09.000 both in his business career. 0:01:08.760 --> 0:01:10.280 And his first term as president. 0:01:10.880 --> 0:01:14.080 You know, he reads the marketplace, he engages with people, 0:01:14.120 --> 0:01:16.640 he uses leverage, and we're gonna get to a great result. 0:01:17.400 --> 0:01:19.080 We're seeing in the midst of it right now. But 0:01:19.120 --> 0:01:21.080 I'm quite optimistic about where we're going. 0:01:21.400 --> 0:01:23.960 Well, the United States has already slashed it's forecast for 0:01:24.000 --> 0:01:27.280 global oil demand. If we continue on this path of 0:01:27.360 --> 0:01:31.440 a trade war, do you expect demand to continue to decelerate? 0:01:35.440 --> 0:01:39.000 Oh, Their prediction of the demise of demand growth for 0:01:39.080 --> 0:01:42.440 oil is is older than I am. So Look, there's 0:01:42.480 --> 0:01:46.440 cyclical factors on economic growth that do impact at the 0:01:46.600 --> 0:01:48.800 long term growth rate of oil little more than a 0:01:48.840 --> 0:01:51.680 million barrels of oil per day per year has been 0:01:51.720 --> 0:01:55.040 going on for decades. I don't see any big change 0:01:55.080 --> 0:01:58.520 in that in the foreseeable future. You see a marketplace 0:01:58.600 --> 0:02:02.000 right now that is worried about economic growth, and I 0:02:02.000 --> 0:02:04.600 think you're seeing some softening in oil prices from that. 0:02:05.240 --> 0:02:08.400 But I think that fear, I think that fear is misplaced. 0:02:09.080 --> 0:02:11.080 I think we're going to end out in a better 0:02:11.160 --> 0:02:14.160 economic situation than we went into this Trump term, I 0:02:14.160 --> 0:02:16.760 think by a long shot. Look, two things are driving 0:02:16.800 --> 0:02:20.560 tariff policy for President Trump. One is we've been very 0:02:20.600 --> 0:02:23.920 welcoming to exports from other nations. We want other nations 0:02:23.960 --> 0:02:26.720 to be just as welcoming of US exports, so we 0:02:26.720 --> 0:02:29.399 can grow our exports more in line with our imports. 0:02:30.200 --> 0:02:35.320 And President Trump wants to see America reindustrialize, investment, jobs, 0:02:35.400 --> 0:02:37.560 and heavy industry back in our country. 0:02:38.000 --> 0:02:40.200 Both those are going to be wonderful for the United States. 0:02:40.560 --> 0:02:41.240 Well, it's not just. 0:02:41.240 --> 0:02:44.919 A softening of oil prices, mister secretary. I'm sure you've 0:02:44.919 --> 0:02:48.560 seen that since Trump's inauguration, prices are down more than 0:02:48.760 --> 0:02:52.280 ten dollars. At what level do you think you can 0:02:52.320 --> 0:02:55.000 see drill baby drills? The President likes to call it 0:02:55.040 --> 0:02:57.360 when it comes to shale producers, because what we're hearing 0:02:57.680 --> 0:02:59.799 is that they cannot do this if price is fall 0:03:00.200 --> 0:03:01.200 fifty dollars a barrel. 0:03:05.160 --> 0:03:05.400 Yeah. 0:03:05.440 --> 0:03:08.920 Look, investment decisions of oil and gas companies in the 0:03:09.000 --> 0:03:10.919 US and abroad or based on a little bit of 0:03:11.040 --> 0:03:13.560 multi year view of oil and gas prices. They're not 0:03:13.760 --> 0:03:16.840 moved based on the spot price of oil today, or 0:03:16.840 --> 0:03:19.560 oil last week or oil next week. So these are 0:03:19.639 --> 0:03:22.760 longer term decisions that are being made. We saw oil 0:03:22.760 --> 0:03:26.720 and gas prices move down immediately after President Trump was elected, 0:03:26.960 --> 0:03:29.360 and that was the market seeing, Oh, yes, all the 0:03:29.480 --> 0:03:32.120 nonsense that's tried to kill the oil and gas industry, 0:03:32.400 --> 0:03:36.400 promised it'll be over soon, stopped giving permits on federal lands. 0:03:36.600 --> 0:03:39.240 All that stuff is going away, and so there's much 0:03:39.280 --> 0:03:41.440 more of a green light on production. So if you 0:03:41.480 --> 0:03:43.640 put more supply into a marketplace, you're going to get 0:03:43.640 --> 0:03:46.160 lower prices. Now we're seeing, as they said, that sort 0:03:46.160 --> 0:03:49.680 of extra fear of world economic growth in the next 0:03:49.680 --> 0:03:51.440 few months over the tariff dialogue. 0:03:51.520 --> 0:03:52.480 That's real fear. 0:03:52.880 --> 0:03:55.720 But I think the marketplace may be discounting the wrong 0:03:55.760 --> 0:03:59.760 answer here. We're going to see very very positive economic 0:03:59.800 --> 0:04:00.960 growth in the next few years. 0:04:01.040 --> 0:04:03.280 But is it still realistic to be talking about adding 0:04:03.320 --> 0:04:06.600 the United States adding another three million barrels of production 0:04:06.800 --> 0:04:07.760 at these prices? 0:04:11.520 --> 0:04:14.960 Well, I think you're referring to Scott Besson's plan there, 0:04:15.040 --> 0:04:19.479 and his three millions was three million barrels of oil equivalent. 0:04:20.000 --> 0:04:22.880 Most of that growth will come from natural gas, and 0:04:22.960 --> 0:04:25.839 of course the domestic demand for natural gas with the 0:04:25.880 --> 0:04:30.480 growth of AI resourcing manufacturing and our surging exports. 0:04:30.800 --> 0:04:34.960 Boy, yes, we will grow oil equivalent. 0:04:34.360 --> 0:04:37.719 Production by at least that much during President's term. But 0:04:37.800 --> 0:04:41.039 we will also grow oil production and other liquid natural 0:04:41.040 --> 0:04:44.279 gas liquid production in the United States as well. So 0:04:44.480 --> 0:04:46.880 absolutely are we going to see strong growth in American 0:04:47.040 --> 0:04:48.640 energy production one hundred percent. 0:04:49.080 --> 0:04:50.840 Mister Secretary, You've been on a tour in the Middle 0:04:50.880 --> 0:04:53.720 East for about two weeks since our understanding that before 0:04:53.760 --> 0:04:57.040 Saudi Arabia decided to add even more barrels to the market, 0:04:57.320 --> 0:04:59.760 there was a conversation, a dialogue between the Trump and 0:04:59.760 --> 0:05:03.000 Minute registration and the Kingdom. Can you give us a 0:05:03.000 --> 0:05:05.480 sense of what that dialogue looked like. Is the United 0:05:05.520 --> 0:05:09.520 States supportive of OPEC plus adding more barrels to this market. 0:05:12.760 --> 0:05:16.719 Yeah, we don't directly coordinate on oil production policies or whatever. 0:05:16.800 --> 0:05:19.960 That's certainly an OPEX purview. But I don't think anyone 0:05:20.000 --> 0:05:24.279 in the world misunderstands President Trump's desire to see more 0:05:24.400 --> 0:05:29.600 energy produced, therefore lower prices and more economic activity. Absolutely, 0:05:29.680 --> 0:05:32.640 that's President Trump's agenda. Look at his genda can be 0:05:32.680 --> 0:05:36.360 summarized as prosperity at home and peace abroad. 0:05:36.839 --> 0:05:38.320 Lower oil prices. 0:05:37.960 --> 0:05:41.280 Help both of those, and the piece abroad that's the 0:05:41.320 --> 0:05:43.640 most concern right now. In the region where I am 0:05:43.640 --> 0:05:47.159 in the Middle East is Iran. Iran over during the 0:05:47.160 --> 0:05:51.600 Biden administration, oil prices were higher. There was sort of 0:05:51.640 --> 0:05:55.839 an appeasement attitude and no strong enforcement of sanctions, enormous 0:05:55.839 --> 0:05:58.960 funding de Hamas to Hesbaala to the Huthis, and a 0:05:59.040 --> 0:06:02.760 rapid advancement of their nuclear program. President Trump's agenda is 0:06:02.839 --> 0:06:06.640 exactly the opposite that it's peace through strength. But we 0:06:06.760 --> 0:06:10.640 simply cannot and will not accept a nuclear armed Iran. 0:06:11.160 --> 0:06:13.000 Well, when it comes to Ron, we saw even more 0:06:13.040 --> 0:06:16.400 sanctions on the regime yesterday. When it comes to these 0:06:16.400 --> 0:06:18.560 oil sanctions, the President has said he wants to go 0:06:18.640 --> 0:06:21.479 back to maximum pressure. Is that part of the conversation 0:06:21.600 --> 0:06:24.880 you're having with golf allies on this tour that they'd 0:06:24.920 --> 0:06:27.120 be willing to step in if some of those Iranian 0:06:27.160 --> 0:06:28.520 barrels come off the market. 0:06:31.839 --> 0:06:35.039 Well, fortunately, just from the United States production itself and 0:06:35.120 --> 0:06:38.800 the size of the global oil market today, Absolutely, we 0:06:38.880 --> 0:06:43.160 can tolerate squeezing out Iranian exports. That and of course, 0:06:43.200 --> 0:06:45.800 do all the golf neighbors want the same thing we want? 0:06:45.960 --> 0:06:46.279 Yes. 0:06:46.640 --> 0:06:50.440 Do they fear a nuclear armed Iran? Absolutely? Do they 0:06:50.480 --> 0:06:53.159 think now is the time to turn the screws and 0:06:53.520 --> 0:06:57.719 end Iran's nuclear weapons program? Absolutely? But yeah, can the 0:06:57.720 --> 0:07:01.520 world tolerate that absolutely. Years ago, twenty years ago, could 0:07:01.520 --> 0:07:05.320 this have happened? No, But today we both have large 0:07:05.360 --> 0:07:09.720 American oil production, better relations with our neighbors, and a strong, 0:07:09.880 --> 0:07:13.360 resolute leader. In forty years of trouble, forty five years 0:07:13.400 --> 0:07:16.360 of trouble from Iran, we've never had a better chance 0:07:16.760 --> 0:07:21.160 to reduce Iranian power, reduce Iranian tyranny in the Middle East, 0:07:21.480 --> 0:07:23.400 and we don't want to miss that opportunity. 0:07:23.520 --> 0:07:25.760 As a secretary, the President has said a lot, even 0:07:25.800 --> 0:07:27.680 recently to me on Air Force One, he likes that. 0:07:27.760 --> 0:07:30.440 Guess oil prices are coming down? Do you and the 0:07:30.480 --> 0:07:33.000 President have a price in mind. 0:07:36.240 --> 0:07:40.360 No, I think my whole life, I've avoided predicting prices 0:07:40.440 --> 0:07:44.640 or dictating prices. We have a wonderful free market economy. 0:07:44.680 --> 0:07:47.680 That's what makes the world wealthier. That's what allows consumers 0:07:47.720 --> 0:07:51.000 to continually re express choices in every direction. 0:07:51.400 --> 0:07:53.840 So no, there's no formula for a good oil price. 0:07:54.040 --> 0:07:58.000 There's just a broader belief that lower cost diesel, lower 0:07:58.040 --> 0:08:02.000 cost gasoline, lower cost home heat, lower cost electricity, all 0:08:02.040 --> 0:08:05.040 of those are good for American consumers and good for businesses. 0:08:05.720 --> 0:08:09.680 That's President Trump's energy agenda and I'm here to implement. 0:08:09.280 --> 0:08:11.840 It, Miss the Secretary, appreciate your time this morning, this 0:08:11.920 --> 0:08:14.040 evening where you are. Thank you very much for being 0:08:14.040 --> 0:08:26.840 with Blimberg TV. The Energy Secretary there, Chris right. This 0:08:26.960 --> 0:08:28.880 is what Sarah Hunt of our pint Saxon was has 0:08:28.920 --> 0:08:31.560 to say. The damage has been done both to markets 0:08:31.600 --> 0:08:34.040 and to sentiment. Goes on to say, what we do 0:08:34.200 --> 0:08:37.720 know is that the uncertainty is likely to continue. Sarah 0:08:37.800 --> 0:08:38.120 joins us. 0:08:38.160 --> 0:08:38.600 Now for more. 0:08:38.640 --> 0:08:40.720 Sarah and Mornick, good morning. How much weight can you 0:08:40.720 --> 0:08:42.240 put on the guidance from the banks this morning? 0:08:42.880 --> 0:08:45.400 Well, I think it's interesting that they're giving guidance at all, 0:08:45.520 --> 0:08:48.880 because I expected a lot more of a not necessarily 0:08:48.920 --> 0:08:51.559 pulling guidance, but a larger uncertainty. 0:08:51.600 --> 0:08:52.960 We were going to bracket things. 0:08:53.240 --> 0:08:55.880 So I think that there is a call to strength 0:08:55.920 --> 0:08:57.920 there that says, you know what, we see what's going on, 0:08:57.960 --> 0:08:59.760 We see what's going on in fixed income markets, and 0:09:00.080 --> 0:09:01.640 see that this is actually going to be a decent 0:09:01.720 --> 0:09:03.679 year for us. And I think for the bigger banks 0:09:03.679 --> 0:09:05.160 that's an easier thing to say than it is for 0:09:05.160 --> 0:09:05.880 some of the smaller events. 0:09:05.920 --> 0:09:08.000 I think how positive people were coming into twenty twenty 0:09:08.080 --> 0:09:11.400 five sentiment sky high. Long growth will improve. Capital markets 0:09:11.440 --> 0:09:14.040 activity is going to be fantastic. Lisa was asking this 0:09:14.120 --> 0:09:16.360 question in the last thirty minutes or so. The capital 0:09:16.400 --> 0:09:20.120 market's activity now for the financials delayed or derailed? Which 0:09:20.120 --> 0:09:20.600 one is it. 0:09:21.160 --> 0:09:23.760 I'm going to say delayed. I don't think it's necessarily derailed. 0:09:23.800 --> 0:09:26.600 I think that ultimately. You know, what was interesting about 0:09:26.600 --> 0:09:28.880 the comments that you brought up earlier in Marie was 0:09:29.000 --> 0:09:30.920 that in that long list were some of the things 0:09:30.920 --> 0:09:33.160 that are supposed to be positive, which is the deregulation, 0:09:33.240 --> 0:09:35.240 and which is some of the mergers and acquisitions and 0:09:35.280 --> 0:09:36.320 stuff that we were. 0:09:36.160 --> 0:09:37.240 Talking about going into this. 0:09:37.520 --> 0:09:39.800 But the fact that the tariffs came so soon, and 0:09:39.840 --> 0:09:43.360 the tariffs came so hot relative to what the expectations were, 0:09:43.559 --> 0:09:46.600 I think has got everybody going losing sight of the 0:09:46.600 --> 0:09:48.240 fact that there may be other things, and I'm not 0:09:48.280 --> 0:09:50.400 sure any of us know exactly what that's going to be. 0:09:50.720 --> 0:09:53.439 Is the market reacting to the hot rhetoric, or is 0:09:53.480 --> 0:09:57.600 the market reacting to market structure issues that are amplifying 0:09:57.679 --> 0:10:00.319 moves that are then causing people, for lack of a 0:10:00.400 --> 0:10:01.320 better word, freak out. 0:10:01.480 --> 0:10:03.480 So this is another problem where the answer is yes, 0:10:03.840 --> 0:10:06.520 because it's all the things right. It's both they're reacting 0:10:06.520 --> 0:10:09.200 to the moves, and there is some there have been 0:10:09.240 --> 0:10:12.200 some ongoing discussions about what's going on underneath the markets 0:10:12.240 --> 0:10:14.640 and whether there's anything going on within the structure of 0:10:14.800 --> 0:10:17.720 the treasury basis trade, this the FX markets. 0:10:17.840 --> 0:10:18.439 So I think that. 0:10:18.400 --> 0:10:20.800 There's a combination of things where you get the first 0:10:20.840 --> 0:10:23.800 reaction on fundamentals, and then the second reaction comes from 0:10:23.840 --> 0:10:25.760 things that we're not necessarily able to see. 0:10:25.840 --> 0:10:26.920 Where are we in that? 0:10:27.000 --> 0:10:28.560 I mean, is there a sense that there's something that 0:10:28.640 --> 0:10:30.600 just blew up, or there's something that's in the process 0:10:30.600 --> 0:10:33.000 of blowing up, and we're watching it and then creating 0:10:33.000 --> 0:10:35.960 a narrative around American exceptionalism around it, and then adding 0:10:36.000 --> 0:10:39.960 some narrative talk about that, and everyone's running to the edges. 0:10:39.679 --> 0:10:40.320 And just hiding. 0:10:40.320 --> 0:10:42.280 I mean, I'm trying to figure out the anatomy of 0:10:42.320 --> 0:10:45.800 what is going on. After a really tumultuous couple of weeks. 0:10:46.000 --> 0:10:47.839 I think that you are not the only one. 0:10:47.840 --> 0:10:49.319 I think all of us are trying to figure out 0:10:49.320 --> 0:10:51.800 what's been going on underneath the surface and or the 0:10:51.840 --> 0:10:55.400 size of some of these moves. How problematic that is 0:10:55.440 --> 0:10:57.760 because so many firms have levered up more and more 0:10:57.800 --> 0:11:00.640 as we've had less volatility, and then you get volatility 0:11:00.640 --> 0:11:02.520 that is off the charts, and you have to think 0:11:02.520 --> 0:11:05.040 that there are some reactions to that, and some of 0:11:05.040 --> 0:11:06.839 those are going to be people making a lot of money, 0:11:06.880 --> 0:11:08.480 and some of them are going to be the opposite. 0:11:08.520 --> 0:11:10.760 And I don't think we have an understanding right now 0:11:10.800 --> 0:11:14.520 of which is the bigger piece of that. As money 0:11:14.559 --> 0:11:16.520 also moves out of the US and goes to other 0:11:16.559 --> 0:11:19.080 places which are smaller than the US, so therefore the 0:11:19.160 --> 0:11:21.120 effects are magnified. So I think that there are a 0:11:21.160 --> 0:11:23.600 lot of different parts of that equation, and I'm not 0:11:23.640 --> 0:11:26.080 sure that we're able to simultaneously solve it right now. 0:11:26.160 --> 0:11:28.400 The Treasury Secretary said yesterday they're going to go through 0:11:28.440 --> 0:11:30.280 the queue when it comes to these deals they're making 0:11:30.320 --> 0:11:31.960 with other countries, and then there's going to be a 0:11:31.960 --> 0:11:35.400 period of quote, great certainty after these ninety days. 0:11:35.440 --> 0:11:37.040 That what you expect ninety days and you get some 0:11:37.040 --> 0:11:37.920 certainty in the market. 0:11:38.360 --> 0:11:40.680 I would love to see great certainty in ninety days. 0:11:40.920 --> 0:11:43.120 I'm not sure that you're going to get great certainty 0:11:43.160 --> 0:11:45.120 because I think that as we go through all of 0:11:45.160 --> 0:11:46.480 these things, there's going. 0:11:46.360 --> 0:11:47.480 To be continuous changes. 0:11:47.520 --> 0:11:49.080 So I think that if you take some of the 0:11:49.200 --> 0:11:51.280 uncertainty off the table, which. 0:11:51.080 --> 0:11:52.240 We haven't yet at all. 0:11:52.520 --> 0:11:54.319 And I think that there was some expectation that once 0:11:54.320 --> 0:11:56.200 the announcements were made, that was going to be a 0:11:56.240 --> 0:11:59.200 catalyst in and of itself from an uncertainty standpoint, and 0:11:59.240 --> 0:12:00.679 all it's done is that up. 0:12:00.920 --> 0:12:02.840 So I think that there is going to be some. 0:12:02.720 --> 0:12:04.719 As you start to get deals through the pipeline and 0:12:04.720 --> 0:12:06.800 people start to understand what they are, I think that 0:12:06.840 --> 0:12:09.120 will help calm things down. But right now we're still 0:12:09.120 --> 0:12:10.959 in that phase where that hasn't happened yet, and I 0:12:11.040 --> 0:12:13.600 think we are that max uncertainty that we all keep 0:12:13.640 --> 0:12:15.959 hoping to get behind just continues on a daily basis. 0:12:15.960 --> 0:12:18.480 As a forward multiple on the SMP doesn't screen recession 0:12:18.640 --> 0:12:20.680 right now, Camra Dawsum, might that point in the last 0:12:20.720 --> 0:12:23.520 hour from your perspective, given the price move we've already seen, 0:12:23.559 --> 0:12:25.480 do you think we have the capacity to absorb back 0:12:25.480 --> 0:12:27.760 news now going into the next several months where we 0:12:27.840 --> 0:12:30.960 might see some pretty big downside surprices on data. 0:12:31.120 --> 0:12:31.800 Well, I think that. 0:12:31.800 --> 0:12:34.120 We came into this year with the market and even 0:12:34.200 --> 0:12:36.800 elevated at multiple than it was right now. So is 0:12:36.840 --> 0:12:38.600 it back to a place where you can feel very 0:12:38.640 --> 0:12:40.400 comfortable with it. No, which is why I think that 0:12:40.440 --> 0:12:42.480 you've got risks to the upside and risk of the downside. 0:12:42.520 --> 0:12:44.640 Because you get really good news in this market wants 0:12:44.679 --> 0:12:46.200 to take off, you get really bad news, and we 0:12:46.240 --> 0:12:48.160 can say, you know, the multiple still expensive and it 0:12:48.200 --> 0:12:50.199 can still come down a little bit. I think that 0:12:50.240 --> 0:12:53.079 what we're looking for is a very choppy year, unfortunately, 0:12:53.360 --> 0:12:56.280 and some hope that as you get through some of 0:12:56.320 --> 0:12:59.840 these issues in terms of understanding what's going to happen, 0:13:00.080 --> 0:13:03.640 people can start making decisions and that delayed economic activity 0:13:03.679 --> 0:13:05.400 doesn't accelerate too much. 0:13:05.520 --> 0:13:07.520 So in the meantime, we just want some way to hide. 0:13:07.559 --> 0:13:09.760 Some people do anyway, some people more aggressive than that. 0:13:09.760 --> 0:13:11.040 But if you want a tin hat and a rock 0:13:11.080 --> 0:13:13.320 to hide under right now, it's not the treasury market. 0:13:13.480 --> 0:13:14.199 What is it. 0:13:14.200 --> 0:13:15.360 It's not the treasury market. 0:13:15.480 --> 0:13:18.520 It's some of the areas that have done fairly well 0:13:19.000 --> 0:13:22.040 in general recessions. Those things like consumer staples, they got 0:13:22.080 --> 0:13:24.120 really really cheap at the end of last year, and 0:13:24.200 --> 0:13:26.560 everybody was looking for more exciting things and more growth, 0:13:26.640 --> 0:13:28.160 and then you look at those multiples, you go, you 0:13:28.160 --> 0:13:30.200 know what, that's not so scary. Some of the defense 0:13:30.240 --> 0:13:32.680 stocks have gotten killed also, and so I think that 0:13:33.280 --> 0:13:36.040 there's some opportunity there. There are some places, even something 0:13:36.080 --> 0:13:38.000 like Walmart. Look at the big banks, there are places 0:13:38.000 --> 0:13:40.200 where they can absorb it. I think the harder thing 0:13:40.280 --> 0:13:42.720 is going to be for smaller and MidCap stocks, because 0:13:42.720 --> 0:13:44.920 the uncertainty is very high right now, and I think 0:13:44.920 --> 0:13:46.200 for them it's much more difficult. 0:13:46.240 --> 0:13:47.720 I want to set on one point that you said 0:13:47.760 --> 0:13:50.720 and make this full circle. The big banks coming into 0:13:50.720 --> 0:13:52.840 this year, a lot of people were really excited about 0:13:52.880 --> 0:13:55.360 them because of the growth in the economy that they 0:13:55.360 --> 0:13:58.600 were expecting, as well as deregulation wave. That's something that 0:13:58.640 --> 0:14:01.240 we heard from Jamie Diamond that the deregulation is going 0:14:01.280 --> 0:14:03.439 to be a real positive. We also are seeing that 0:14:03.840 --> 0:14:07.160 steeper yield curve that could also benefit these banks in 0:14:07.160 --> 0:14:09.080 some ways. Are the banks that have in in good 0:14:09.080 --> 0:14:12.080 times and that given how much they've built capital and 0:14:12.080 --> 0:14:15.199 what a different position they're in now than pre pandemic. 0:14:15.320 --> 0:14:16.960 I think that it's a much Yes, I think it's 0:14:17.000 --> 0:14:19.400 a much different situation for them now. But I also 0:14:19.400 --> 0:14:21.600 think if you look back when all the technology stocks 0:14:21.640 --> 0:14:24.600 are outperforming, the banks are underperforming. So in good times 0:14:24.800 --> 0:14:27.040 they tend to lag a little bit, and in bad times, 0:14:27.120 --> 0:14:29.080 I think people go, oh, my goodness, there's a great 0:14:29.160 --> 0:14:31.640 business model, and we're all looking at cash those we're 0:14:31.640 --> 0:14:33.600 all looking at balance sheets again, all of those things 0:14:33.640 --> 0:14:36.400 become of utmost importance when you have this much volatility. 0:14:36.440 --> 0:14:38.960 Can we finish on tech? What becomes of Apple if 0:14:39.000 --> 0:14:41.640 we don't get an exemption for that name? What happens 0:14:41.640 --> 0:14:42.640 to some of these companies. 0:14:44.160 --> 0:14:46.480 I don't necessarily want to speculate on what happens to 0:14:46.480 --> 0:14:47.920 Apple if it doesn't get an exemption. 0:14:48.080 --> 0:14:49.880 I think that is it not bad that you couldn't 0:14:49.880 --> 0:14:51.560 possibly even speculate, Well. 0:14:51.440 --> 0:14:53.480 I mean you can sure, you can speculate, and you 0:14:53.520 --> 0:14:55.480 can say, well, ninety percent of their phones are coming 0:14:55.520 --> 0:14:57.840 from here, then we lose x amount. I think the 0:14:58.400 --> 0:15:01.000 problem is it is such and I mean this goes 0:15:01.000 --> 0:15:03.720 back to those discussions in twenty eighteen and twenty nineteen 0:15:03.720 --> 0:15:06.440 that the tech stocks are actually staples of themselves because 0:15:06.520 --> 0:15:06.840 are you. 0:15:06.800 --> 0:15:08.080 Going to live without an iPhone? 0:15:08.120 --> 0:15:09.880 And how many people are going to say, Okay, now 0:15:09.880 --> 0:15:12.000 I'll just go back to the method of financing it 0:15:12.040 --> 0:15:14.000 that the phone companies used to do, and I won't 0:15:14.000 --> 0:15:16.080 buy it outright, so that two thousand dollars doesn't become 0:15:16.280 --> 0:15:19.240 as scary as twelve hundred dollars. They're expensive things to 0:15:19.280 --> 0:15:22.840 start with, but I think that the ingrainedness of that 0:15:22.920 --> 0:15:25.680 technology into our lives is difficult to separate. 0:15:25.960 --> 0:15:27.760 So I don't know that for that. 0:15:27.800 --> 0:15:30.080 Reason, it's as bad as it would be because it's 0:15:30.120 --> 0:15:32.600 not a lot of speculative buyers of iPhones. 0:15:32.960 --> 0:15:45.360 So Rahan, I appreciate it. Of Vutpant Saxon Woods. We 0:15:45.520 --> 0:15:48.360 begin this out with stocks fluctuating. It's earning season kicks 0:15:48.360 --> 0:15:51.000 into full gear, so Vita suplimanning. But Bank for America 0:15:51.040 --> 0:15:54.600 writing first quarter beats animisses may not move the needle 0:15:54.640 --> 0:15:57.480 as much as in recent quarters. There is a reasonable 0:15:57.520 --> 0:16:03.600 probability the absence some resolution or clarity transparency could be compromised. 0:16:03.720 --> 0:16:05.600 Savita joined us now for more Cevita, good. 0:16:05.480 --> 0:16:06.520 Morning, Good morning. 0:16:06.640 --> 0:16:08.560 Reflected on the bank earning so far and so far, 0:16:08.680 --> 0:16:10.680 so good. And there's a line that you used over 0:16:10.680 --> 0:16:13.800 the last week that it's dangerous to underestimate companies on 0:16:13.840 --> 0:16:15.920 the S and P five hundred now dangerous is it 0:16:16.000 --> 0:16:16.800 really well. 0:16:16.880 --> 0:16:20.960 I think that my mantra is own cash and stocks, 0:16:21.280 --> 0:16:25.520 sell bonds, because if we're in this environment of inflation 0:16:26.040 --> 0:16:28.880 of you know, even lower growth, I think that's a 0:16:29.040 --> 0:16:34.400 terrible environment for asset classes that have no optionality. When 0:16:34.440 --> 0:16:37.320 you think about stocks, they have lots of options. Companies 0:16:37.440 --> 0:16:40.800 can pull forward cash return, they can you know, they 0:16:40.840 --> 0:16:44.440 have creative accounting mechanisms. So there's a lot of optionality 0:16:44.480 --> 0:16:47.680 that companies have that the bond market doesn't. When I 0:16:47.680 --> 0:16:51.720 think about earnings, this this upcoming quarter, you know, who 0:16:51.760 --> 0:16:54.640 cares what happened in Q one? I think the focus 0:16:54.720 --> 0:16:56.920 is going to be on guidance or lack thereof. 0:16:57.160 --> 0:16:58.280 So what worries me. 0:16:58.320 --> 0:17:01.320 Is that a lot of companies intimated that they you know, 0:17:01.360 --> 0:17:03.800 they have to pull guidance, and we saw this in 0:17:03.800 --> 0:17:05.360 twenty twenty with COVID. 0:17:06.440 --> 0:17:07.160 It's not great. 0:17:07.320 --> 0:17:09.840 So what we found is that companies that pull guidance, 0:17:09.840 --> 0:17:13.560 that used to issue guidance typically under perform on average 0:17:13.600 --> 0:17:17.160 by about three percent until they actually start start giving 0:17:17.240 --> 0:17:21.200 us guidance. So it's understandable that these corporates can't give 0:17:21.280 --> 0:17:23.320 us guidance. Who knows, I mean, it's a it's a 0:17:23.400 --> 0:17:27.359 very uncertain environment. But that transparency that we used to 0:17:27.440 --> 0:17:31.040 have in the s and P. Five hundred has been compromised, 0:17:31.040 --> 0:17:32.720 and I think that's the key risk. 0:17:32.800 --> 0:17:34.480 Can we talk about the playbook for you and the team. 0:17:34.480 --> 0:17:36.560 Have you spent some time on the stagflash playbook. 0:17:36.800 --> 0:17:37.080 We have. 0:17:37.200 --> 0:17:39.280 We've spent a lot of time on that playbook. We've 0:17:39.280 --> 0:17:41.760 spent a lot of time on the tech bubble, you know, 0:17:41.840 --> 0:17:45.200 de Rating Playbook two thousand and eight, and I think 0:17:45.280 --> 0:17:49.320 this environment rhymes with all of those. During a stagflationary environment, 0:17:50.000 --> 0:17:52.399 you want it to be in stocks over bonds. You 0:17:52.440 --> 0:17:54.600 want it to be in value overgrowth. 0:17:54.920 --> 0:17:55.600 So you wanted to. 0:17:55.600 --> 0:18:00.400 Basically buy cash and cash yield and that's where cap 0:18:00.520 --> 0:18:03.000 value comes in. And that's still you know, I still 0:18:03.040 --> 0:18:08.080 see this as a very unusually attractive size and style 0:18:08.119 --> 0:18:10.800 box in the s and P. Five hundred, nobody talks 0:18:10.800 --> 0:18:13.320 about large cap value anymore because it hasn't worked for 0:18:13.359 --> 0:18:14.320 such a long time. 0:18:14.600 --> 0:18:17.440 But if you think about these companies, these are you know. 0:18:17.400 --> 0:18:22.120 Kind of big companies that have rationalized capacity, are focused 0:18:22.119 --> 0:18:26.000 on returning cash. You know, energy companies have transformed their 0:18:26.040 --> 0:18:31.680 philosophy from drilling and capex to cash return above everything else, 0:18:32.240 --> 0:18:34.760 and these are companies that actually benefit from a little 0:18:34.800 --> 0:18:36.879 bit of inflation, which we're likely to get if we 0:18:36.920 --> 0:18:37.920 see these tariffs go. 0:18:37.920 --> 0:18:39.840 Through in any way, shape or form. 0:18:40.160 --> 0:18:41.880